Viterra has entered into an agreement with Cargill to acquire five storage and handling sites and a mobile ship loader in South Australia and western Victoria. These are the GrainFlow sites at Maitland, Crystal Brook, Mallala, Pinnaroo, and Dimboola, as well as the mobile ship loader at Port Adelaide.
The acquisition will deliver efficiencies for the South Australian and western Victorian supply chain and bring tremendous opportunities for growers, buyers and the industry.
Viterra Chief Executive Officer ANZ, Philip Hughes says Viterra’s ability to maximise the capabilities of the GrainFlow sites will allow the company to provide customers economic benefits with reduced costs and increased ability to attract higher prices.
“By using the sites’ high speed rail and truck loading facilities to complement our existing network, we will bring more tonnes to port through the most efficient and cost effective route. This increase in supply chain velocity will enable us to meet the rising demand for high quality local grain in the first half of the year, assisting growers to achieve a premium for their grain by exporting more tonnes earlier in the season,” Philip says.
“Growers will also see a direct benefit with reduced freight rates due to the efficiencies we will gain.”
Bringing the sites into the Viterra network will result in reduced freight rates by 15% at Mallala, Crystal Brook and Pinnaroo and 25% at Dimboola and Maitland and provide opportunities for freight efficiency gains across other Central and Eastern region rail sites, with Viterra passing savings to growers.
Viterra will integrate the GrainFlow sites into its network and has plans to make significant initial and ongoing investments to optimise their potential.
“We will be investing approximately $25 million into these sites in the first two years and will continue investing $8 million annually to support efficient outturns, and improve delivery times and the grower experience more broadly where required. This is in addition to the $75 million we currently invest in our network each year.”
Philip says the acquisition is an important step in Viterra’s focus of making the South Australian grain supply chain more efficient to compete with interstate and international origins of the Black Sea, Canada, US and South America and attract more buyers to purchase from the state.
“This will further enhance the level of service for buyers accessing the South Australian grain supply chain which supports Viterra’s focus of increasing competition for South Australian and western Victorian growers’ grain.
“In the past five years the number of exporters purchasing from our network has doubled, with 24 exporters using Viterra’s network, which has directly benefitted growers.
“We look forward to growing our relationship with Cargill, who will continue to be one of the 24 exporters purchasing grain through the Viterra network, and seeing them increase their volumes as a key exporter from South Australia.”
Cargill Australia Managing Director, Zsolt Kocza says Cargill is committed to growing its business in South Australia and across Australia more generally.
“We have a long term access agreement to Viterra's export supply chain, supporting our long-term growth plans. In the next few years we intend to double our export volumes and become one of the largest exporters from the state. This means buying more grain from growers to the benefit of growers and the industry overall,” Zsolt says.
“We are excited to build on this growth in the future and continue demonstrating our commitment to the Australian grains industry.”
Additional information
The transaction will require approval by the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB).
Cargill is further demonstrating its commitment to the Australian grains industry, including;
- An investment of $100m to upgrade to its crush facilities in New South Wales and Victoria.
- Exploring a proposed crush facility in Western Australia to service the APAC oil and meal market and the emerging biofuel sector.
- Launched a new sustainable product for Australian farmers, Cargill SustainConnect, paying canola growers for sustainable agricultural practices.
